Updated May 9, 2019

EquityMultiple Review

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Think you don't have enough money to invest in real estate? EquityMultiple is a real estate crowdfunding website that may change your mind. Check out what they offer below.

5-point scale (the higher, the better)

Pros and Cons

  • Variety of investment options
  • Quality real estate deals
  • Transparent expected returns
  • Large minimum investment
  • Accredited investors only
  • Can't resell securities

Bottom Line

Passive real estate crowdfunding for accredited investors

Crowdfunding in commercial real estate helps people just like you start investing. EquityMultiple is a real estate crowdfunding platform backed by Mission Capital, a real estate capital firm.

They offer the opportunity to invest in commercial real estate with as little as $5,000. Basically, this allows investors to invest in real estate from the comfort of their own home.

How EquityMultiple Works

When you invest in EquityMultiple, you lend money to sponsors. These sponsors use the funds to purchase commercial real estate. Once the deal funds, the sponsor purchases the real estate and you start earning returns.

You Should Know
EquityMultiple doesn't lend to just any sponsor. They conduct background checks on the sponsors and make sure their previous projects had a positive outcome.

They then conduct an evaluation on the neighborhood to ensure that it's a solid investment. Once EquityMultiple decides an investment is worthwhile, it goes through an in-depth underwriting process.

It's only offered to investors once it passes through each of these layers.

You can view the investments available and decide which one(s) are right for you, if any. EquityMultiple provides three different investment opportunities: syndicated debt, preferred equity, and common equity.

Each of the investments offers monthly or quarterly payments and they are specific about the investment length. You can expect to find investments ranging from:

  • 6 to 24 months for syndicated debt
  • 1-3 years for preferred equity
  • 2-5 years for common equity

Compare plans >

Who Should Use EquityMultiple?

  • Investors looking to diversify their portfolio. Commercial real estate investing used to be out of reach for standard investors.

    Today, it's possible with the help of technology, bringing investors together in one place to help fund million-dollar projects.

  • Investors who can accept risk. No matter how much a company does their research and only picks the "good" investments, there's still a risk.

    If you are an investor who has a diversified portfolio AND feel comfortable with the risks associated with real estate investing, this could be a good option.

  • Investors who want someone to do their due diligence on potential investments for them. EquityMultiple conducts a lot of research and spends a lot of time vetting an investment opportunity.

    While no investment is risk-free, you can be assured that EquityMultiple thought an investment was worthwhile if you see it on their platform.

Reasons We Like EquityMultiple

  • They are transparent with the expected returns. Before you even invest in a potential deal, you'll see the expected distribution scheduled on the offering page.

    Typically, debt and equity investments provide monthly or quarterly distributions plus the repayment of principal upon maturity. Each deal can differ, though, so reading the fine print is crucial.

  • Your debt investments have collateral. If the borrower defaults on the loan, EquityMultiple will foreclose on the property and pay you with the sale proceeds before they pay equity investors.

  • You get access to institutional-quality real estate deals. Not too long ago, only the rich could afford to invest in commercial real estate. Now it's available to accredited investors.

    You get the advantage of investing in potentially profitable real estate investments with low default rates. You don't have to pony up the capital required for the full deal or handle property management work.

    But you can reap the rewards of the investment.

  • EquityMultiple invests in the real estate too. If you want reassurance that a company did its due diligence in researching an investment, you've got it with EquityMultiple. With their syndicated debt investments, the platform has "skin in the game."

    In other words, you can rest assured that they researched the opportunity well to ensure that they don't lose their money as well.

  • They offer a variety of investment options. You can choose your investment based on your risk level. The riskiest type of investment is the equity investment, as they are the last investors to get paid. But they can reap unlimited return if the deal goes well.

    Debt investors and preferred equity investors are usually the first to recoup their investment should the deal go south. You choose the investment based on what you can risk to lose or how much you want your portfolio diversified.

  • EquityMultiple accepts less than 10% of the potential investment opportunities. If a crowdfunding platform readily accepts most investment opportunities that come their way, it could mean they don't do a lot of research and/or vetting of the opportunity.

    EquityMultiple does its due diligence and has such strict standards that only an estimated 10% of opportunities make it through their requirements.

  • You can diversify your portfolio across the real estate market. You can invest in a variety of real estate options, including multifamily, office, hotel, retail, mixed-use, self storage and more.

  • The investments in real estate made by EquityMultiple are professional managed. You don't have to worry about managing the tenants or maintaining the properties yourself.

    EquityMultiple handles all property and business plan chores. All that you do is invest your money and collect your distributions as they come in.

  • EquityMultiple doesn't get paid until investors receive their initial investment back. This is Equity Multiple's way of proving that they will put your interests before theirs.

  • You can view investments for free. Once you register for an account, you can browse the available investments all that you want. You will only pay account fees once you start investing in a deal.

Reasons You May Want to Look Elsewhere

  • You need at least $5,000 to invest. The average investment at EquityMultiple is actually around $10,000, but they say that they do have investments as low as $5,000.

  • You must be an accredited investor. In order to be eligible to invest in EquityMultiple, you must have at least $200,000 in income or have $1 million in net worth.

    If you aren't accredited, then you cannot invest with EquityMultiple.

  • You can't resell your securities. Your investments at EquityMultiple are typically illiquid. In other words, you hold onto them until maturity.

    In rare cases, there may be a liquidation event, at which point you can liquidate your investment. However, you would need to obtain EquityMultiple's approval before selling your interest to another private investor.

How It Compares

  • Fundrise allows investors the opportunity to invest in a diverse portfolio of alternative assets. Investors need a minimum investment of $10 and investors don't have to be accredited.

    Fundrise only offers thoroughly vetted opportunities on their platform as well.

Compare Fundrise >

Bottom Line

If you are an accredited investor and you want to try your hand at real estate investments, EquityMultiple is a viable choice.

With various offerings and strict underwriting standards, they are a worthy investment vehicle for many investors.

Write to Kim P at feedback@creditdonkey.com. Follow us on Twitter and Facebook for our latest posts.

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Fundrise, LLC ("Fundrise") compensates CreditDonkey Inc for new leads. CreditDonkey Inc is not an investment client of Fundrise.

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